Tag: Economics

Which of the following combination of changes is likely to increase the international competitiveness 
of a country’s products?

Select ONE answer:

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 4

1. A decrease in labour productivity and an appreciation of the currency would both be likely to increase the relative price of domestically produced products.
2. A decrease in labour productivity would be likely to reduce it by raising wage costs. Although a depreciation of the currency would increase international competitiveness by reducing export prices and increasing import prices.
3. An increase in labour productivity would increase international competitiveness but an appreciation of the currency would reduce it.
4. Correct: An increase in labour productivity and a depreciation of the currency would reduce the relative price of domestically produced products. This would be likely to make domestically produced products more internationally competitive.

 

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The exchange rate between the pound sterling and the US dollar is initially £1 = $1.5.

A UK firm sells a product in the USA for $300.

The exchange rate changes to £1 = $1.2 and the firm keeps the dollar price unchanged.

What will be the price of the product in pounds?

Select ONE answer:

1. £200
2. £250
3. £300
4. £360

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 2

1. This is the initial price i.e. $300/1.5.
2. Correct: $300/1.2.
3. This would be the case if the exchange rate changed to £1 = $1.
4. This is $300 x 1.2.

 

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Two countries X and Y both produce mobile phones and corn.

The quantity of the two goods produced by both countries when they divide their resources equally between the two goods is shown in the table below.

What can be concluded from this information?

Select ONE answer:

1. Country X has the comparative advantage in the production of corn.
2. Country Y has the absolute advantage in the production of corn.
3. Trade would benefit Country Y but not Country X.
4. Trade would not benefit either country.

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 4

1. Country X has the absolute advantage in producing corn but there is no comparative advantage as its opportunity cost of producing one unit of corn is the same as in Country Y i.e. 1⁄4 mobile phone,
2. Country Y does not have the absolute advantage in producing corn.
3. Trade would benefit neither country. They could each get the same number of extra mobile phones by shifting resources internally.
4. Correct: There is no comparative advantage in this case. The opportunity cost of producing 1 mobile phone is 4 units of corn in both countries.

 

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The table below shows the price indices for a country’s exports and imports in 2015 and 2016.

What was the country’s terms of trade in 2016?

Select ONE answer:

1. 0.875
2. 1.143
3. 87.5
4. 114.3

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 3

1. Incorrect calculation: 105/120
2. Incorrect calculation: 120/105
3. Correct: Index of export prices/index of import prices x 100 = 105/120 x 100.
4. Incorrect calculation: 120/105 x 100.

 

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Which of the following would appear as a credit item in the trade in services balance of the UK’s balance of payments?

Select ONE answer:

1. earnings on German shares owned by UK citizens
2. expenditure by US tourists in the UK
3. the payment by a UK firm to a Japanese firm to transport its goods
4. the purchase of a UK firm by an Indian multinational company

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 2

1. This is a credit item but it appears in the income/primary income section of the current account of the balance payments.
2. Correct: This is a credit item as it is money entering the country. It appears in trade in services under the title ‘travel’ of the current account of the balance payments.
3. This appears in trade in services but as a debit item of the current account of the balance payments.
4. This is a credit item but it appears in the financial account of the balance of payments.

 

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The table below shows the inflation rate for an economy between 2012 and 2015.

What can be concluded from the information?

Select ONE answer:

1. The price level was lowest in 2014.
2. The price level was lowest in 2016.
3. The economy experienced deflation over the whole period.
4. The value of money rose over the whole period.

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 1

1. Correct: The price level rose over the period 2014 to 2017 and so it was at its lowest in 2014.
2. The price level did fall in 2016 but it was still higher than in 2014.
3. The economy experienced deflation in 2016 but over the period the price level rose.
4. The value of money fell over the period as the price level rose.

 

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Which of the following is not a feature of a ‘good’ tax?

Select ONE answer:

1. certainty
2. convenience
3. durability
4. equity

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 3

1. This is a quality of a good tax.
2. This is a quality of a good tax.
3. Correct: This a characteristic of money but not a feature of a good tax.
4. This is the quality of a good tax.

 

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